Insuring Foreign Receivables

Perhaps the two biggest financial deterrents to selling overseas are the time it takes to collect from distant customers and the risk of nonpayment. Most banks won't lend against foreign orders or receivables without insurance. Export-credit insurance isn't cheap (typically, 50¢ to $1 per $100), but it permits small companies to make sales they couldn't finance on their own; to cover potential losses, the bank is assigned as beneficiary of the policy.

The Foreign Credit Insurance Association is the main option for companies exporting less than $5 million a year. Depending on the cause of loss, the FCIA (whose minimum premium is $500) covers from 90% to 100%, with a deductible. Rates vary, but insurance for most countries is available. The FCIA has offices in New York City, Chicago, Houston, Miami, and Los Angeles. -- Bruce G. Posner